Thinking About Thinking

U.S. Stock Performance Over 50 Years

Posted in Economy by larrycheng on January 1, 2010

How well have US stocks performed? 

With another decade in the books, here’s the quick compounded annual return of the S&P 500 for 50 years:

  • Last 10 years: -2.9%
  • Last 20 years: 6.1%
  • Last 30 years: 8.3%
  • Last 40 years: 6.5%
  • Last 50 years: 6.2%

Here’s the compounded annual return of the Dow Jones Industrial Average for 50 years:

  • Last 10 years: -0.5%
  • Last 20 years: 7.0%
  • Last 30 years: 9.0%
  • Last 40 years: 6.7%
  • Last 50 years: 5.8%

And finally, the compounded annual return of the Nasdaq Composite over 30 years:

  • Last 10 years: -5.7%
  • Last 20 years: 8.4%
  • Last 30 years: 9.5%

People used to say that stocks generate about 8%+ annual returns over the long-run.  It seems fairer now to say that stocks generate 6%+ annualized returns over the long-run.  That type of return doesn’t blow my mind given inflation and capital gains tax though it’s still better than a lot of things.  I also have to think that the next 10 years will be better than the last 10 years.